Dealers Make Extra Money Leasing Space At Dealership, But How Do You Stay Compliant?

• By: Jeff Martin
• On: 10/29/2020 10:02:13
• In: Texas Posts
• Comments: 0

As business has slowed for some dealers, we have received phone calls from members asking about sharing a lot or renting space to other dealers. Here are few things to keep in mind if you are considering renting a portion of your lot or sharing a location.
 
Multiple dealers at one location
 
You may share a lot with other dealers, but you may not have more than four retail dealers located in the same business structure, and only eight wholesale dealers per structure. Wholesale and retail dealers MAY NOT share an office.  If the building shares a roofline, it's considered a single structure. 
 
Multiple businesses at one location (same owner)
 
If you own a dealership and another business and they are operating under the same name, for example Joe's Enterprises, then the same phone number may be used.  But, if the business is operated under DIFFERENT names, for example Joe's Used Cars and Joe's Antiques, then separate phone listings and separate signs are required.
 
Multiple businesses at one location (different owners)
 
You CAN share space with a non-dealer only if you own the property yourself or if you have a separate lease in the name of the dealer business signed by you and the owner.  The dealer has to have a separate business line, phone number, and office equipment. So, could you open a dealership out of your uncle's bait and tackle shop?  In theory, yes you could, and many dealerships share space with other small businesses.  However, you would still have to meet all the premise requirements for an independent automobile dealer.
 
Lessor and lease facilitators
 
Keep in mind, a retail dealer and lessor or lease facilitator may not operate out of the same business structure unless they share the same owner.
 
Inventory
 
If you decide to share space with another business, including another dealer, then your inventory must be separated, and must also be separate from any parking areas.  Think of this as the reasonable person test.  If a reasonable person approached your premises, would he be able to clearly see what vehicles are for sale, and by whom? In next week's blog we will cover inventory and display areas in more detail.